China’s government seems to be embracing non-fungible tokens (NFTs) over cryptocurrencies.
Hong Kong news outlet The South China Morning Post reported today that the government-backed China blockchain-based services network Blockchain Services Network (BSN) plans to launch a new NFT infrastructure later this month.
The major point is that there is no connectivity between the infrastructure and cryptocurrency.
China Wants to Control its Market
China is definitely solid in its stringent approach to digital currencies, but regulators give the thumbs up to NFTs as long as the business has no strings linked to cryptocurrencies.
Despite Beijing authorities’ ban on cryptocurrencies, He Yifan, CEO of Red Date Technology, the technical provider team behind BSN, stated that NFT faces no legal issues in China as long as it avoids cryptocurrencies such as Bitcoin.
NFT services and transactions are now processed in Chinese Yuan, the only currency permitted.
The new infrastructure, dubbed BSN-Distributed Digital Certificate (BSN-DDC), would provide an application programming interface for organizations or individuals to construct their own user portal or application for NFT management.
A Hopeless Problem for Central Planners
NFTs have recently emerged on public blockchains, allowing for the production of one-of-a-kind digital objects that may be owned, traded, and exchanged decentralized.
While the underlying technology of NFTs generally share some similarities to cryptocurrencies, they are not intended to function as a form of currency nor are they designed to be used as a store of value.
However, due to their open-source nature, public chains are illegal in China. In the event of criminal activity, the country demands user identification verification in all internet systems, as well as regulatory engagement.
Since its initial release in 2018, BSN, the underlying basis of the NFT project funded by China Mobile, China UnionPay, and the state-owned State Information Center, has localized more than 20 public chains.
The Digital Yuan is a Joke
Officials from the Bank of China have already warned that the decentralization and anonymity of NFTs and the metarverse make them a potential weapon for lawbreakers.
Gou Wenjun, director of the Central Bank of China’s Anti-Money Laundering Monitoring and Analysis Center, stated publicly in December 2021 that virtual assets are widely used in illegal transactions such as extortion, drug trafficking, gambling, money laundering, terror activities, evasion, and cross-border money transfers.
Beijing authorities have eyed NFTs for a long time, and although China has cracked down on mining and trading of cryptocurrencies like Bitcoin, the NFT and metaverse remain active in the gray zone.
Despite the fact that there is no legal restriction on NFTs, big tech businesses have taken precautions when it comes to NFT project releases. For regulatory compliance considerations, they refer to digital collections rather than “NFTs.”
Hey – What Happened to Jack Ma?
Ant Group, Alibaba Group Holding’s financial technology (fintech) subsidiary, and Tencent Holdings were the first Chinese tech giants to embrace NFT, offering a multitude of products.
JD.com and Baidu are the next that joined the bandwagon, launching their own digital collections.
The BSN-DDC infrastructure has the ability to upend the existing NFT sector. It has over 20 partners, including blockchain network Cosmos, digital receipt system manufacturer Baiwang, and video technology service provider Sumavision.
According to He, as compared to other single-company platforms, BSN-DDC is cross-chain interoperable and less expensive, with NFT issuance costing as little as 0.05 yuan. The project is expected to be profitable this year if it contributes to the production of 10 million NFTs.
According to He, Red Date and all DDC project partners are working on building as transparent a network as possible, while staying compliant with Chinese regulations and laws.
Fiat currency will be used to pay all the gas fees on the BSN-DDC network. Good luck China.